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What Is The Role of Government In Fostering Increased Economic Inclusion In The Baltimore Region?

It is essential to acknowledge the central and indispensable role that government plays in promoting and supporting economic inclusion activities, often serving as an instrumental partner in the initiatives. In this chapter (below is chapter 5 of Collectively We Rise: The Business Case for Economic Inclusion in Baltimore), we examine that subject. We begin by providing an overview of how local and state government acts as a catalyst for economic inclusion efforts and offer an example of a recent Baltimore development project to illustrate government’s role. We then profile some of the ways local and state government officials have promoted and facilitated economic inclusion efforts.

Public officials in Baltimore City and Maryland have a deep appreciation of the positive contributions economic inclusion makes to the social and economic health of the city and state. As we have previously noted, addressing barriers of opportunity is both an issue of equity and fundamental fairness, and an issue of economic self-interest.

There has been a wide range of efforts by local and state government, spanning a variety of administrations, to promote greater economic inclusion in the city and region. In many cases, those governmental efforts were a response to advocacy by community leaders and residents. Sometimes representatives of the business sector or anchor institutions also were active in calling for the economic inclusion efforts. In other instances, public officials themselves were the prime movers of the initiatives.

Government has many ways, both direct and indirect, to foster economic inclusion. Public officials can fund specific programs or services, such as workforce training and business development programs, that increase the ability of disadvantaged residents to secure good jobs or help individuals start the own businesses. Government can also use incentives and other approaches to encourage economic inclusion efforts by the private sector. Government can, for instance, make access to public resources for a development project contingent on the private entities conducting local hiring and/or procuring a portion of required goods and services from local firms or MBE/WBEs. Relative to those hiring and procurement requirements, government can also assist the business or developer in identifying local residents who would be qualified job candidates12 and MBEs/WBEs and other local firms that could provide goods and services. Government officials can also help a business or private institution reach out to and build relationships with community partners and neighborhood residents when the business or institution is considering actions that will have an impact on surrounding neighborhoods.

Port Covington Development Project

One prominent recent example of a publicly assisted Baltimore project that incorporated economic inclusion activities is Under Armour’s Port Covington project, which is being led by Sagamore Development. The Port Covington project is a multi-billion-dollar mixed-use waterfront development being built on 250 acres in south Baltimore. The project will involve 12 million square feet of building development, including both commercial space and housing. To help make this development project possible, in September 2016 the City of Baltimore signed legislation that committed $600 million in municipal bonds toward the Port Covington effort. The bonds are being used for tax-increment financing (TIF) to fund infrastructure for the project, with the bonds repaid through new property taxes. In response to advocacy by a coalition of community leaders, Sagamore Development signed a memorandum of understanding which guaranteed local hiring, supplier diversity, and other economic inclusion features. The Community Benefits Agreement includes a 30% local hiring mandate and a commitment that 20% of the housing produced will be affordable housing units. The community benefits deal also includes: $39 million in direct benefits to the six neighborhoods surrounding Port Covington; $55 million in other direct citywide benefits, including workforce development initiatives, education programs, college scholarships, recreation facilities, and youth summer jobs; and $6 million in incremental costs to pay prevailing wages on the project. In addition to those community benefits, the project is expected to generate thousands of jobs, secure Under Armour’s growing presence in Baltimore, and revitalize part of the city’s waterfront.

The Port Covington Community Benefits Agreement negotiations were informed by the experience of the local faith-based and community leaders in their previous efforts to secure commitments from developers for community benefits on the State Center, Harbor Point, and Superblock development projects.

In discussing these earlier efforts, Dr. S. Todd Yeary, Senior Pastor at Douglas Memorial Community Church, described the process that several faith-based leaders had followed in developing their initial strategies for engaging developers around the topic of economic inclusion and community benefits. According to Dr. Yeary:

“The first thing we tried to do is see if there was an identifiable need [which a development project could address] … We asked people in the community, ‘what was the first level of need,’ and it was clear it was the severe un- and under-employment, [especially] among people with low-skills but a high upside … People said what they needed was jobs. They saw economic projects and development happening [across Baltimore], but there was not a correlation between these employment issues and the focus [of the development projects]. …We also wanted to try to test the demand for jobs—we wanted to quantify how many wanted a job … [At a 2010 community meeting on jobs] we expected 250 people to come to Union Baptist [church] to demonstrate a measurable level of interest. Instead, 1500 people showed up … We saw high demand [for jobs] but low opportunity … We found that people were ready and eager to go to work, and just needed to have someone to help them transition from social dependence—or worse—to gainful employment. We felt that the development projects occurring might be a gateway [to jobs], perhaps not directly with the developer, but through the residual pieces [i.e., the subcontracts and other work occurring relative to the development].”

While access to jobs was viewed as the top priority, Dr. Yeary indicated that through the work of the community advocates emerged the idea of community benefits agreements that are multi-faceted. That is, in addition to creating job opportunities for local residents, the advocates are looking to the agreements to provide roles that make the community a true partner in the development process and leverage resources to assist in building the capacity of a variety of community entities, including nonprofits, community banks, and local colleges. The underlying premise is to ensure the success and sustainability of not only the development project itself, but also the broader community adjoining the development.

Obviously, the scope and specific features of community benefits agreements will vary according to the nature and size of development projects. Nonetheless, some city officials have noted that Port Covington and other recent develop projects have been useful in beginning to establish clearer standards for the community benefits and economic inclusion impacts that developers should expect to provide in return for receiving public financing or other forms of public assistance to make their development projects possible. City officials hope that such standards can become the “norm” for all development efforts happening in the city, and not just for the projects receiving public financing. Below, we profile a variety of other approaches—besides a TIF—used by local and state government to foster economic inclusion efforts by the private sector.

City of Baltimore Economic Inclusion Programs and Tools

One Baltimore For Jobs (1B4J)

In response to the unrest of April 2015, the Mayor’s Office of Employment Development (MOED), in partnership with Maryland’s Department of Labor, Licensing and Regulation, applied to the U.S. Department of Labor (DOL) for demonstration funds to explore innovative workforce development strategies. MOED was awarded a two-year, $5 million grant from DOL. With input from community residents, MOED designed One Baltimore for Jobs (1B4J), which targeted young African-American men from distressed city neighborhoods, fusing occupational skills training and support services. Nineteen organizations were funded directly through 1B4J, and more than 50 community-based organizations received assistance through sub-grants. Grantees included 13 organizations that provided skills training in key industry sectors (manufacturing, healthcare, construction, and transportation/logistics) that are growing and offer career pathways.

Two 1B4J grantees provided remedial adult education on reading and math skills and four conducted intensive outreach to disconnected residents. These activities helped the local workforce system function like an integrated network. The 1B4J effort met all its performance goals and generated policy changes and new relationships among partners.

Made in Baltimore

Made In Baltimore is an initiative of the Baltimore Office of Sustainability. It aims to spur reinvestment in Baltimore City by growing the market for locally produced goods. Made In Baltimore supports Baltimore makers and manufacturers through a local-brand certification program, promotion and marketing events, and business development services. By helping grow local companies that make high-quality products, Made In Baltimore supports living-wage jobs that are accessible to all. As of February 2018, over 130 businesses had been certified. In addition, the initiative has partnered with MICA’s bookstore to feature local products to the community and is working with other institutions to do the same.

Employ Baltimore Executive Order and Local Hiring Law

The Employ Baltimore Executive Order, which Mayor Stephanie Rawlings-Blake signed in June 2011 and that was subsequently revised in 2013, encourages businesses awarded between $50,000 and $300,000 in municipal contracts to
utilize the Baltimore City’s workforce delivery system to recruit qualified city residents to fill the businesses’ open positions. The Local Hiring Law, which was passed by the Baltimore City Council and took effect in December 2013, requires companies that receive municipal contracts greater than $300,000 and entities that receive $5 million in assistance for City-subsidized to projects, to take steps to ensure that 51 percent of new jobs created are filled by city residents. This framework has been used to link local hiring to the public school construction efforts and the development of the Horseshoe Baltimore Casino.

City of Baltimore MBE/WBE Participation Requirements

The City Code directs the City of Baltimore’s Minority and Women’s Business Opportunity Office to establish appropriate MBE and WBE participation requirements in all contracts awarded by the City. The participation requirements vary by contract. In setting the goals for a particular contract the office will consider, among other factors, the contract specifications, the availability of qualified MBEs and WBEs, the level of utilization of such firms in past City contracts of a similar nature, and the adverse impact on non-MBEs and non-WBEs.

Baltimore City Anchor Plan

In June 2014, Mayor Rawlings-Blake released the Baltimore City Anchor Plan, which announced a partnership between the City of Baltimore and eight anchor institutions to promote community and economic development in three targeted geographic sectors within Baltimore. Each sector had its own action plan that outlined the mutual commitments of the City and the anchor institutions focused on the designated geographic area. Proposed action items for each sector focused on four priority areas: public safety, local hiring, local purchasing, and quality of life.

Pugh Administration Economic Inclusion Priorities

Under Mayor Catherine E. Pugh, the City of Baltimore is advancing a comprehensive economic development vision, emphasizing strategies that support Baltimore’s residents and neighborhoods, particularly in the areas of small business development, workforce development, and youth empowerment. The newly formed Mayor’s Office of Small, Minority, and Women-Owned Business features new staff to elevate the voice of the small business community, restructured City resources and programming to prioritize small business development, entrepreneurship, commercial and “Main Streets” districts, and efforts to grow opportunities for minority and women-owned firms. The City is implementing new practices to recognize and grow the number of City-certified Minority and Women-Owned businesses, examining procurement practices to create more competition in City contracts, and using the hiring and purchasing power of City agencies to train and hire residents and conduct business with local firms. Other unfolding projects include a new partnership with Kaiser Permanente to launch business development programming provided through the Initiative for a Competitive Inner City (ICIC) and the launch of the new Baltimore Business Lending Program administered by local CDFI Baltimore Community Lending.

Workforce strategies are also a priority. During 2017, for example, Mayor Pugh hosted the inaugural Work Baltimore job and resource fair, which included a series of job-readiness workshops and seminars, and linkages to job opportunities with City agencies and other employers. In addition, the City of Baltimore and Baltimore City Community College, in collaboration with the Baltimore City Public School System, are launching the Mayor’s Scholars Program that will give all 2018 Baltimore City public high school graduates the opportunity to attend community college tuition-free beginning in fall of 2018. The Mayor has also directed City agencies to take workforce resources to communities, including the Mayor’s Office of Employment Development’s deployment of the City’s first mobile jobs unit in spring 2018, as well as street-level canvassing of homes and businesses with on-the-spot information for job-seekers, and job fairs for high school seniors and employers.

State of Maryland Economic Inclusion Programs and Tools

EARN Maryland

Employment Advancement Right Now (EARN) Maryland is a state-funded competitive workforce development grant program that began in 2013 and is designed to help businesses cultivate the skilled workforce they need to compete. EARN Maryland invests in strategic industry partnerships from key economic sectors in every region of the state. The industry-led partnerships develop plans for training and educating the workers and for placing them in meaningful employment. Through those efforts, EARN Maryland not only responds to the demands of businesses for skilled workers but also addresses the needs of workers by creating formal career paths to good jobs, reducing barriers to employment, and sustaining and growing middle-class jobs. EARN also encourages economic mobility for hard to-serve job seekers through supporting job-readiness training, which may include GED preparation, occupational skills development, literacy advancement, and transportation and child care components.

Since EARN’s launch in 2014, $32 million has been invested in workforce development activities. As of October 2017, 2,767 unemployed and underemployed participants had completed entry-level training programs, and 84% of those individuals obtained employment. A recent study on the economic impact of EARN Maryland found that for every state dollar invested in the program, $18.97 in additional economic activity is created in Maryland.

Maryland Executive Order on Use of Apprenticeship Programs and Local Hiring Plans in State Contracting

In September 2013, Governor Martin O’Malley issued an executive order that directed certain state entities that procure contracts for construction services to follow new procurement guidelines. The executive order required the agencies to consider using contractors who participate in registered apprenticeship programs. In addition, for public projects or public-private partnerships with estimated costs exceeding $5 million taking place in high-unemployment areas, the executive order directed state agencies to consider a bidder’s voluntary commitment to a community hiring agreement as a selection factor in the procurement.

Diverse Supplier Regulations of the Maryland Public Service Commission (PSC)

In 2015, the PSC adopted new regulations encouraging utilities and other companies it regulates to increase their use of diverse suppliers, defined as minority-owned, women-owned, and service-disabled veteran-owned business enterprises.

Small Business Reserve Program

Created in 2004, Maryland’s Small Business Reserve Program supports the growth and success of the small business community by providing small businesses with the opportunity to participate as prime contractors on state contracts. It establishes a unique marketplace where small businesses compete against other small businesses, instead of against larger, more established companies. Under Maryland’s procurement law, the SBR Program directs 70 participating state agencies and departments to spend at least 15% of their fiscal year procurement expenditures with qualified small businesses.

Minority Business Enterprise Program (MBE)

Maryland MBE regulations direct 70 participating state agencies to make every effort to award an overall minimum goal of 29% of the total dollar value of their procurement contracts directly (to prime contractors) or indirectly (through subcontractors) to certified MBE firms. The participating agencies and departments examine their procurements and set specific minority participation goals on a contract-by contract basis.

Community Development Programs

The Maryland Department of Housing and Community Development administers several programs that provide capital and operating funding to support community reinvestment and economic opportunities. The Community Legacy Program provides funding to local governments and community development organizations to strengthen communities through business retention and attraction, encouraging homeownership and commercial revitalization. The Baltimore Regional Neighborhood Initiative provides capital and operating grants to community development organizations focusing on areas and opportunities where a modest investment and coordinated strategy will have appreciable neighborhood revitalization impact. A new fund, the SEED Community Development Anchor Institution Fund, was created in 2016 to provide grants and loans for community development projects in blighted areas. The state has allocated $4 million to support an anchor institution community engagement facility.